UK watchdog to investigate Tesco accounts and auditor PwC

LONDON, Dec 22 (Reuters) - Britain's accounting watchdog has
launched an inquiry into the preparation, approval and audit of
Tesco's accounts over the last four years, including
the role of external auditor PwC.

Supermarket chain Tesco said in September that it had
overstated first-half profits by 250 million pounds ($391
million) due to incorrectly booking payments from suppliers - a
figure later raised to 263 million pounds, compounding earlier
profit warnings.

The scandal led to the suspension, then exit, of several
senior executives and sparked a series of investigations,
including by Britain's Serious Fraud Office and possible
investor lawsuits both in Britain and the United States.

Watchdog the Financial Reporting Council (FRC) said on
Monday its investigation related to Tesco's financial years
ended Feb. 25, 2012, Feb. 23, 2013 and Feb. 22 2014 and the
first half to Aug. 23 2014.

"The FRC has launched an investigation under the Accountancy
Scheme into members and a member firm in relation to the
preparation, approval and audit of the financial statements of
Tesco," the FRC said on Monday.

Tesco said it had noted the FRC's statement. "We will
provide support to the FRC's investigation," said a spokesman.

PwC has been Tesco's auditor since 1983.

"We take our responsibilities very seriously and remain
committed to delivering work to the highest professional
standards. We will co-operate fully with the FRC in its
inquiries," PwC said in a statement.

The FRC has powers to sanction accounting firms and their
staff for failing to apply book-keeping rules properly.

Shares in Tesco, down 45 percent so far this year, were down
0.5 percent at 184.4 pence at 1213 GMT.